Representing California Tenants & Former Homeowners in
Post-Foreclosure Evictions (Updated through April 1, 2015)
Unlawful detainer (UD) actions are typically associated with
landlord-tenant law. Former borrowers, though, often defend eviction
after foreclosure.1 They face different timelines and challenges, but
both tenants and former borrowers continue to struggle against
unlawful detainer actions as lenders and investors buy up foreclosed
properties2 and attempt to evict residents soon after purchase. Various
affirmative defenses arise from improper foreclosure procedures, so
these types of UDs are intimately related to foreclosure law. This
practice guide reviews state and local measures in California that
govern post-foreclosure UD actions and reviews the former federal
protections in the recently expired Protecting Tenants at Foreclosure
Act. It also provides practice tips for defending UDs on behalf of both
tenants and former borrowers.
Overview
Foreclosure purchasers seeking to remove tenants or former
borrowers must comply with both UD notice requirements and with
statutory foreclosure procedures. Specifically, plaintiffs bear the
1 A foreclosing entity that purchases the property at the foreclosure sale, or a bona
fide purchaser (BFP), must serve the previous homeowner with a 3-day notice to quit.
If the former homeowner continues to occupy the property after this notice expires, or
“holdover,” the foreclosing entity or BFP must bring a judicial unlawful detainer
action to evict. CAL. CIV. PROC. CODE § 1161a(b)(3) (2013).
2 See, e.g., Darwin Bond Graham, The Rise of the New Land Lords, EAST BAY
EXPRESS, Feb. 12, 2014, http://www.eastbayexpress.com/oakland/the-rise-of-the-newland-lords/Content?oid=3836329 (detailing the recent Oakland-based foreclosure
acquisitions of the “global real estate empire called Colony Capital”); Nathaniel
Popper, Behind the Rise in House Prices, Wall Street Buyers, N.Y. TIMES, June 4,
2013, at A1 (describing the rise or Real Estate Owned (REO) properties in depressed
housing markets).
This project was made possible by a grant from the Office of the Attorney General of California, from the National Mortgage Fraud Settlement, to assist California consumers. burden of establishing:3 1) proper service of a valid notice to quit; 2)
compliance with the foreclosure notice and recording requirements of
CC 2924;4 3) duly perfected title (which includes the authority to
foreclose aspect of CC 2924(a)(6));5 and 4) that the tenant or former
borrower is holding over.6
I.
UD Notice Requirements and Local Protections
Prior to 2009, and after 2014, tenants renting in states without
post-foreclosure protections were (and currently are) at the mercy of
their new landlords once foreclosure is complete.7 From 2009 through
2014, all tenants were protected by federal notice requirements.
California had, and continues to maintain, stricter state protections.
California “just cause” localities often give the greatest amount of
protection.
A. Tenants
1. Former federal protections
To address widespread tenant displacement brought on by the
housing crisis, Congress enacted the Protecting Tenants at Foreclosure
Act of 2009.8 The law sunset December 31, 2014,9 after efforts to make
3 See CAL. EVID. CODE § 500 (2011) (“[A] party has the burden of proof as to each fact
the existence or nonexistence of which is essential to the claim for relief or defense
that he is asserting.”); Wells Fargo Bank, N.A. v. Detelder-Collins, 2012 WL 4482587,
at *7 (Cal. App. Div. Super. Ct. Mar. 28, 2012) (citing § 500 and putting the
evidentiary burden on the UD plaintiff). Please refer to Cal. Rule of Ct. 8.1115 before
citing unpublished decisions.
4 See CAL. CIV. CODE § 2924(a)(1)-(5) for the full list of requirements.
5 See CAL. CIV. CODE § 2924(a)(6) (2013).
6 CAL. CIV. PROC. CODE § 1161a(b)(3) (2013); see also Vella v. Hudgins, 20 Cal. 3d 251,
255 (1977) (requiring UD plaintiffs to show that the foreclosure sale was proper and
demonstrate duly perfected title); Aurora Loan Servs., LLC v. Brown, 2012 WL
6213737, at *7 (Cal. App. Div. Super. Ct. July 31, 2012) (listing plaintiff’s affirmative
burdens).
7 NHLP, The Protecting Tenants at Foreclosure Act: Three Years Later, 42 HOUS. L.
BULL. 181, 181 (Sept. 2012); NAT’L LOW INCOME HOUS. COAL., Renters in Foreclosure:
A Fresh Look at an Ongoing Problem, 1 (Sept. 2012), available at
http://nlihc.org/sites/default/files/Renters_in_Foreclosure_2012.pdf (“[The PTFA]
provide[d] the first national protection for renters.”).
8 The Protecting Tenants at Foreclosure Act of 2009, Pub. L. No. 111- 22, div. A, tit.
VII, §§ 701-704, 123 Stat. 1632, 1660-62 (enacted May 20, 2009), as amended by Pub.
L. No. 111-203, tit. XIV, § 1484 (July 21, 2010) [hereinafter PTFA]. For a more
2
it permanent failed. Bills to re-enact the PTFA and to make it
permanent were introduced in March 2015.10
Under the PTFA, a successor in interest was required to provide
bona fide tenants with a 90-day notice to vacate before beginning the
unlawful detainer process.11 If there was an existing lease, the tenant
could remain in possession until the lease expired.12 This protection
did not apply if the purchaser intended to occupy the property as their
primary residence.13 In that case, a bona fide tenant was still entitled
to a 90-day notice, but their tenancy could be terminated before the
expiration of their fixed-term lease.14
A tenant had to be “bona fide” to qualify for PTFA protection: the
tenant could not be the former homeowner or the child, spouse or
parent of the homeowner, and the lease must have been an “arm’s
length” transaction for not substantially less than fair market value
rent.15 Lodgers, tenants renting a room from the homeowner rather
thorough treatment of the first three years of the PTFA and related case law, refer to
NHLP, supra note 7.
9 PTFA § 704.
10 S. 730, 113th Cong. (2015); H.R. 1354, 113th Cong. (2015). See generally NAT’L LOW
INCOME HOUS. COAL., Bills Introduced to Permanently Protect Tenants at Foreclosure
(Mar. 16, 2015), available at http://nlihc.org/article/bills-introduced-permanentlyprotect-tenants-foreclosure.
11 PTFA § 702(a)(2)(B); Bank of N.Y. Mellon v. De Meo, 254 P.3d 1138, 1141 (Ariz. Ct.
App. 2011) (90-day period must be specified in the notice); Curtis v. US Bank Nat’l
Ass’n, 50 A.3d 558, 564-65 (Md. 2012) (90-day period begins the day tenant receives
notice, not the day of foreclosure); Wedgewood Cmty. Fund II, LLC v. Sheffield, 2013
WL 6924725, at *2 (Cal. Super. Ct. App. Div. San Bernardino Cnty. Dec. 30, 2013)
(three-day notice served on bona fide, periodic tenants was improper as they were
entitled to a 90-day notice under the PTFA). See generally NHLP, supra note 7, at
185.
12 PTFA § 702(a)(2)(A); Nativi v. Deutsche Bank Nat’l Tr., 223 Cal. App. 4th 261, 284
(2014); Fontaine v. Deutsche Bank Nat’l Tr. Co., 372 S.W.3d 257, 260 (Tex. App.
2012). To benefit from this provision, tenants must have entered into their leases
before “notice of foreclosure:” when title transferred to the new landlord at the
foreclosure sale. PTFA § 702(a)(2)(A); see 28th Tr. No. 119, City Inv. Capital v.
Crouch, 2013 WL 3356585, at *2 (Cal. App. Div. Super. Ct. June 27, 2013) (pointing
to the PTFA amendment that clarified this definition of “notice of foreclosure”). See
NHLP, supra note 7, at 184-85, for a more thorough discussion of this definition.
13 PTFA § 702(a)(2)(A).
14 Id. See generally CEB, California Eviction Defense Manual, § 20.8 (2d ed. 1993,
June 2015 update).
15 PTFA § 702(b). See generally NHLP, supra note 7, at 182, 185 (reviewing these
qualifications in detail). To demonstrate fair market value, a tenant may offer
evidence of services performed in exchange for rent. Rent does not require monetary
payment. 28th Tr. No. 119, 2013 WL 3356585, at *1 (finding the trial court erred by
failing to consider the fair market value of tenant’s services, which tenant performed
3
than an entire house, may still have been considered “bona fide” under
the PTFA,16 as could tenants renting illegal units.17 Housing Choice
Voucher tenants were automatically bona fide tenants under the
PTFA.18
Tenants unsuccessfully argued in both federal and state courts that
the PTFA included an implied private right of action.19 Only two
federal appeals courts considered the issue and both failed to find a
federal private right of action.20 One of those courts, however, and the
California Court of Appeal, found that tenants could nevertheless
assert state-law causes of action premised on a successor-in-interest’s
PTFA violations.21
in exchange for discounted monetary rent). It may be the tenant’s burden, however,
to demonstrate that services were commensurate with fair market rent. See, e.g.,
Customers Bank v. Boxer, 84 A.3d 1256, 1261 (Conn. App. Ct. 2014) (rejecting
tenant’s PTFA-based eviction defense because tenant offered no evidence that
services allegedly performed in exchange for rent were equal to fair market rent).
16 See, e.g., TDR Servicing LLC v. Smith, No. 37-2010-00200020 (Cal. App. Div.
Super. Ct. Aug. 29, 2012) (“Sub-tenant” status is not enough to disqualify a tenant
from PTFA protection.).
17 See Nativi v. Deutsche Bank Nat’l Tr. Co., 223 Cal. App. 4th 261, 286 (2014)
(extending PTFA protection (as a basis for affirmative state law claims) to tenants
renting an illegal garage unit); Erlach v. Sierra Asset Servicing, LLC, 226 Cal. App.
4th 1281, 1301-02 (2014) (reaffirming Nativi and holding that tenants renting illegal
units—here a unit without proper utilities—were protected by the PTFA).
18 PTFA § 703; Protecting Tenants at Foreclosure: Notice of Responsibility Placed on
Immediate Successors in Interest Pursuant to Foreclosure of Residential Property, 74
Fed. Reg. at 30,107-08 (June 24, 2009) (“[T]he Section 8 tenant’s lease is, in effect, a
bona fide lease.”). The new owner took title to the property subject to both the Section
8 lease and the Housing Assistance Payments (HAP) contract with the local public
housing agency. PTFA § 703.
19 See, e.g., Nativi v. Deutsche Bank Nat’l Tr. Co., 2010 WL 2179885, at *2-4 (N.D.
Cal. May 26, 2010) (finding that it would be inappropriate to create a federal private
right of action for a statute that is basically the province of state law). The PTFA did
not include an explicit private right of action.
20 See Logan v. U.S. Bank Nat’l Ass’n, 722 F.3d 1163, 1170-73 (9th Cir. 2013); Mik v.
Fed. Home Loan Mortg. Corp., 743 F.3d 149, 158-60 (6th Cir. 2014).
21 See Mik, 743 F.3d 149 at 167-70; Nativi v. Deutsche Bank Nat’l Tr. Co., 223 Cal.
App. 4th 261, 285-89, 319 (2014). See Brittany McCormick, Questions Corner, 44
HOUS. L. BULL. 85 (Apr./May, 2014) for a full explanation of private right of action
litigation related to the PTFA.
4
2. California protections
a. Time requirements
As part of the Homeowner Bill of Rights, the California Legislature
passed tenant protections that go beyond those included in the PTFA,
and continue to protect tenants after the PTFA’s expiration.22 Effective
January 1, 2013, all tenants occupying a foreclosed home require a 90day notice to quit, even tenants who did not qualify as “bona fide”
under the PTFA.23 As was true under the PTFA, tenants with fixed
term leases may maintain their tenancy through the lease term,
paying rent to their new landlord.24 Tenants with fixed-term leases
must meet criteria identical to the former PTFA’s “bona fide”
conditions to qualify for protection throughout their lease term.25
Under state law, the plaintiff in a UD action bears the burden of
showing a tenant with a fixed-term lease does not meet these
requirements.26
The PTFA established a base of protections that state and local jurisdictions could
expand upon: “[N]othing under this section shall affect the requirements for
termination of any . . . State or local law that provides longer time periods or other
additional protections for tenants.” PTFA § 702(a)(2)(B). For a more thorough review
of California statutory notice requirements for UD actions, refer to CEB, supra note
14, § 1.8.
23 See CAL. CIV. PROC. CODE § 1161b (2013). A “tenant” is considered a person who
pays rent for housing, or who works or provides services in exchange for housing. See
Rossetto v. Barross, 90 Cal. App. 4th Supp. 1, 5 (2001) (“Rent may not necessarily be
a single specific dollar amount. It consists even of services.”). Renters of illegal units
may have qualified for PTFA protection. See cases cited supra note 17. The reasoning
in Nativi and Erlach could form the basis for arguing that tenants of illegal units are
afforded the California-specific protections as well. See Carter v. Cohen, 188 Cal.
App. 4th 1038 (2010) (finding tenant’s rental of an illegal unit not a bar to her claim
against her landlord for illegal rent increases). Former homeowners, though, are not
considered tenants under state or local law, nor were they considered tenants under
the PTFA.
24 CAL. CIV. PROC. CODE § 1161b (2013); PTFA § 702(c). Also like the PTFA, there is
an exception for purchasers who intend to use the property as their primary
residence. In that case, tenants still require a 90-day notice. CAL. CIV. PROC. CODE §
1161b(b)(1) (2013).
25 § 1161b(b)(2)-(4) (The tenant cannot be the child, spouse, or parent of the landlordmortgagor and the lease must be an arm’s length transaction for fair market value).
26 See § 1161b(c).
22
5
b. Cover sheet & method of notice
California law also mandates additional notice requirements than
those formerly required by the PTFA. Unless the notice
unambiguously provides at least 90 days to vacate, it must be
accompanied by a “cover sheet” with exact language dictated by
statute, advising tenants to seek legal counsel, to respond to all
forthcoming notices, and of the 90-day, fixed-term, and just cause
jurisdiction lease protections.27 At least one court has found that cover
sheets are required for all residential tenants, regardless of whether
they are actually entitled to a 90-day notice.28
California law also governs the method of service of notices to quit,
requiring attempts at personal service first, and then outlining the
posting and mailing alternatives.29 UD plaintiffs must strictly comply
with the method of service requirements. Tenants and former
homeowners can use flaws in service to successfully defend UDs.30
§ 1161c (“[T]he immediate successor in interest . . . shall attach a cover sheet, in
the form as set forth [below].”) (emphasis added). See 28th Tr. No. 119, City Inv.
Capital v. Crouch, 2013 WL 3356585, at *2 (Cal. App. Div. Super. Ct. June 27, 2013)
(reversing the trial court’s judgment for plaintiff in part due to plaintiff’s failure to
notify tenant of her right to remain in possession until the expiration of her lease,
violating § 1161c(c) cover sheet requirements).
28 See Canterbury Lots 68, LLC v. Carr, 2014 WL 4922430, at *4 (Cal. App. Div.
Super. Ct. Sept. 16, 2014) (reversing an unlawful detainer judgment against a tenant
because the notice to quit was not accompanied by the required cover sheet,
notwithstanding that tenant resided with the former homeowner and was not
entitled to a 90-day notice under California law).
29 See CAL. CIV. PROC. CODE § 1162 (detailing personal delivery and “nail and mail”
methods).
30 See, e.g., Liebovich v. Shahrokhkhany, 56 Cal. App. 4th 511, 513 (1997) (“A lessor
must allege and prove proper service of the requisite notice. [Citations.] Absent
evidence the requisite notice was properly served pursuant to section 1162, no
judgment for possession can be obtained.”); Opes Invs., Inc. v. Yun, 2014 WL
4160072, at *1-2 (Cal. App. Div. Super. Ct. July 16, 2014) (reversing trial court’s
grant of summary judgment to plaintiff who alleged compliance with notice to quit
service requirements but submitted no corresponding evidence. Tenant gave evidence
he was never personally served a notice to quit, never received notice by mail, and
that the notice was never posted at the property. Former homeowner asserted she
likewise never received notice to quit, creating a triable issue of fact and rendering
summary judgment improper.); 28th Tr. No. 119, 2013 WL 3356585, at *3 (finding
the failure to list a tenant name on the proof of service a fatal defect in plaintiff’s UD
case).
27
6
3. Local protections
The California Homeowner Bill of Rights set a floor of tenant
protections that localities can build upon.31 There are at least fifteen
California cities and towns that provide some level of “just cause for
eviction” protection, including San Francisco, Los Angeles, Oakland,
and San Diego.32 In these localities, foreclosure is not considered a
“just cause” for eviction, and landlords are therefore prevented from
evicting tenants simply for leasing a home purchased at foreclosure.33
Accordingly, tenants may retain possession until there is a “just cause”
to evict, regardless of whether they are month-to-month tenants or
tenants with a fixed-term lease.34
Advocates should note that many of these “just cause” provisions
were passed to coincide with local rent control ordinances, and the
terms “just-cause” and “rent control” are sometimes used
interchangeably to describe local protections for tenants in foreclosure.
Advocates should inquire, however, whether the just cause protections
for tenants in foreclosure in a particular city apply only to tenants with
apartments in rent-controlled structures. At least two California cities,
San Francisco and Los Angeles, recently expanded just cause eviction
protections to residential buildings not covered by rent control
ordinances.35
B. Former Borrowers
In terms of notice, former borrowers enjoy far fewer UD protections
than tenants. Absent any federal regulation, once title is transferred to
31 “Nothing in this section is intended to affect any local just cause eviction
ordinance.” CAL. CIV. PROC. CODE § 1161b(e) (2013); see also Gross v. Superior Court,
171 Cal. App. 3d 265 (1985) (California foreclosure laws do not preempt local eviction
protections.).
32 Refer to Tenants Together, Foreclosure Related Laws,
http://www.tenantstogether.org/article.php?id=935, for a complete list and links to
municipal websites. NHLP maintains a national list of most state and local
protections, available at http://nhlp.org/node/1341.
33 See, e.g., BERKELEY MUN. CODE, Rent Stabilization and Eviction for Good Cause
Ordinance § 13.76 (Ord. 5467-NS § 1, 1982: Ord. 5261-NS § 1, 1980).
34 For more information on this topic, see CEB, supra note 14, at § 20.10.C.
35 See S.F. ADMIN. CODE § 37.9D (2014); L.A. MUN. CODE ch IV, art 14.1, § 49.92
(2014). For a quick reference to which ordinances only protect tenants in rent
controlled apartments, and those that have been extended to non-rent controlled
structures, see NHLP, supra note 32.
7
the new owner in a foreclosure sale, the purchaser may give the former
borrower a 3-day notice to quit.36 If the former borrower continues in
possession, the new owner must file an unlawful detainer to evict.37
Self-help, including locking the former borrowers out of the property
without going through the UD process, is grounds for forcible entry
and detainer, trespass, and wrongful eviction claims.38 The same
service requirements that apply to tenant notices to quit also apply to
notices served on former borrowers and may be used as defenses in a
UD answer.39
II.
Compliance with California Foreclosure Law
Without a proper foreclosure sale, the purchaser does not hold
valid title to the property and cannot satisfy that UD prerequisite
under CCP 1161a.40 There are two ways to show an improper
foreclosure sale, and both tenants and former borrowers can attack the
sale to defend a post-foreclosure UD: 1) demonstrate that the
foreclosure notice and recording procedures were not followed; or 2)
show that the beneficiary or trustee did not have the authority to
See CAL. CIV. PROC. CODE § 1161a(b)(2).
Id. See generally CEB, supra note 14, at § 20.4.
38 See, e.g., Makreas v. First Nat’l Bank of N. Cal., 2013 WL 2436589, at *11-12 (N.D.
Cal. June 4, 2013) (granting former homeowner-plaintiff’s partial summary judgment
motion on his trespass and wrongful eviction claims based on defendant-bank’s
illegal, post-foreclosure lock-out); Karp v. Margolis, 159 Cal. App. 2d 69, 75-76 (1958)
(holding that purchasers who entered into the premises without legal process after
foreclosure were guilty of forcible entry).
39 See CAL. CIV. PROC. CODE § 1162; Bank of N.Y. Mellon v. Preciado, 224 Cal. App.
4th Supp. 1, 8 (2013) (finding service improper because plaintiff used the “nail and
mail” method before attempting personal service on tenants and former homeowner
in a foreclosed home); US Bank, N.A. v. Cantartzoglou, 2013 WL 443771, at *10-11
(Cal. App. Div. Super. Ct. Feb. 1, 2013) (same); see also Opes Invs., Inc. v. Yun, 2014
WL 4160072, at *2 (Cal. App. Div. Super. Ct. Orange Cnty. July 16, 2014) (reversing
trial court’s grant of summary judgment to plaintiff who alleged compliance with
notice to quit service requirements and submitted a declaration of proper service;
former homeowner asserted she never received notice to quit, creating a triable issue
of fact and rendering summary judgment improper).
40 See Preciado, 224 Cal. App. 4th Supp. at 9 (in a CCP 1161a UD, a “plaintiff must
show that he acquired the property at a regularly conducted sale and thereafter “duly
perfected” his title”); Aurora Loan Servs., LLC v. Brown, 2012 WL 6213737, at *7
(Cal. App. Div. Super. Ct. July 31, 2012) (linking invalid title with plaintiff’s lack of
standing to sue for possession); US Bank N.A. v. Espero, 2011 WL 9370474, at *4
(Cal. App. Div. Super. Ct. Dec. 27, 2011) (same).
36
37
8
foreclose.41 The latter can be much more difficult to prove but, if
shown, can void a completed foreclosure sale.
A. Improper Foreclosure Notice & Recording Procedures
Once a trustee’s deed upon sale is recorded, there is a presumption
that the foreclosing entity complied with the foreclosure notice and
recording requirements of CC 2924.42 Absent evidence to the contrary,
this presumption may be difficult for former borrowers and tenants to
overcome.43 The presumption becomes conclusive for bona fide
purchasers of the property.44 Importantly, this presumption does not
apply to the authority to foreclose aspect of CC 2924(a)(6).45
B. Authority to Foreclose & Duly Perfected Title
Pre-HBOR, former borrowers generally had a limited ability to
challenge plaintiff’s title in an unlawful detainer action: only
noncompliance with foreclosure statutes and the legitimacy of the sale
itself could be litigated.46 However, if a defendant could show defects or
41 See generally HBOR Collaborative, Litigating Under the California Homeowner
Bill of Rights & Nonjudicial Foreclosure Framework, part II.A (Mar. 2015), available
at http://calhbor.org/wp-content/uploads/2015/04/PG-Mar-2015-update-FINAL-4-115.pdf (discussing the authority to foreclose and its relation to CC 2924(a)(6)).
42 See CAL. CIV. CODE § 2924(c); Biancalana v. T.D. Serv. Co., 56 Cal. 4th 807, 814
(2013); Moeller v. Lien, 25 Cal. App. 4th 822, 831-32 (1994).
43 See, e.g., Wells Fargo Bank, N.A. v. Detelder-Collins, 2012 WL 4482587, at *6-7
(Cal. App. Div. Super. Ct. Mar. 28, 2012) (accepting the trial court’s finding that
defendant borrower’s allegations that they never received foreclosure notices were
not credible and applying the presumption of compliance to § 2924’s notice
requirements, but not its authority to foreclose element); US Bank N.A. v. Espero,
2011 WL 9370474, at *2 (Cal. App. Div. Super. Ct. Dec. 27, 2011) (same); cf. E*Trade
Bank v. Mainusch, No. 1-13-AP-001607 (Cal. App. Div. Super. Ct. Feb. 4, 2015)
(Former homeowners successfully overturned a UD judgment because plaintiff failed
to introduce trustee’s deed into evidence and offered no other evidence of compliance
with CC 2924). But see Opes Invs., Inc. v. Yun, 2014 WL 4160072, at *3 (Cal. App.
Div. Super. Ct. July 16, 2014) (reversing a grant of summary judgment to the
plaintiff, which pointed to a trustee’s deed upon sale that listed the purchaser as
“Opes Investments” but identified itself in its complaint as “Opes Investments, Inc.,”
offering no evidence that these two entities were identical, or any evidence that the
sale complied with CC 2924).
44 CAL CIV CODE § 2924(c); Biancalana, 56 Cal. 4th at 814.
45 See Bank of Am., N.A. v. La Jolla Group II, 129 Cal. App. 4th 706 (2005) (statutory
presumptions do not apply to purchasers at invalid sales).
46 Cheney v. Trauzettel, 9 Cal. 2d 158, 160 (1937); Old Nat’l Fin. Servs., Inc. v.
Seibert, 194 Cal. App. 3d 460, 465 (1987).
9
serious questions going to the validity of assignments or substitutions
of trustees, or if a plaintiff simply failed to provide any evidence
showing duly perfected title, courts generally reversed judgments for
plaintiffs and prevented evictions.47 HBOR has since codified this
authority to foreclose requirement in CC 2924(a)(6).48
Even when the authority to foreclose is not an issue, there may be
some defect that would void the foreclosure sale and destroy the
plaintiff’s claim of “duly perfected title.”49 In Barroso v. Ocwen Loan
47 See, e.g., Bank of N.Y. Mellon v. Preciado, 224 Cal. App. 4th Supp. 1, 9-10 (2013)
(reversing UD court’s judgment for plaintiff because plaintiff had failed to show
compliance with CC 2924 – specifically, plaintiff failed to explain why DOT and
Trustee’s Deed upon Sale listed two different trustees); Aurora Loan Servs., LLC v.
Brown, 2012 WL 6213737, at *5-6 (Cal. App. Div. Super. Ct. July 31, 2012) (finding
plaintiff’s lack of evidence showing valid assignment and substitution of trustee fatal
to their UD action, in the face of irregularities in the recording of those documents);
Wells Fargo Bank, N.A. v. Detelder-Collins, 2012 WL 4482587, at *7 (Cal. App. Div.
Super. Ct. Mar. 28, 2012) (reversing judgment for plaintiff because plaintiff could not
show a valid, recorded substitution of trustee that would have given the foreclosing
entity authority to foreclose); US Bank N.A. v. Espero, 2011 WL 9370474, at *4 (Cal.
App. Div. Super. Ct. Dec. 27, 2011) (reversing trial court’s judgment for plaintiff
because plaintiff provided no evidence that it was assigned the property from the
purchaser after foreclosure). But see Aurora Loan Servs. v. Akins, No. BV-029730
(Cal. App. Div. Super. Ct. Apr. 26, 2013) (rejecting former borrower’s argument on
appeal that plaintiff had to produce evidence of duly perfected title because in an
appeal, defendant borrower had to offer some evidence of her own to reverse a trial
court’s error).
48 CAL. CIV. CODE § 2924(a)(6) (2013) (“No entity shall record . . . a notice of default
. . . or otherwise initiate the foreclosure process unless it is the holder of the
beneficial interest under the mortgage or deed of trust, the original trustee or the
substituted trustee under the deed of trust, or the designated agent of the holder of
the beneficial interest.”).
49 “Duly” perfected title encompasses all aspects of purchasing the property, not just
recorded title. See Bank of N. Y. Mellon v. Preciado, 224 Cal. App. 4th Supp. 1, 9-10
(2013) (finding the trial court erred in accepting the recorded trustee’s deed as
conclusive evidence of duly perfected title in the face of contradictory evidence that
the property was sold to borrower’s loan servicer, not the UD plaintiff asserting title);
E*Trade Bank v. Mainusch, No. 1-13-AP-001607 (Cal. App. Div. Super. Ct. Feb. 4,
2015) (Former homeowners successfully overturned a UD judgment because plaintiff
failed to introduce trustee’s deed into evidence and offered no other evidence of
compliance with CC 2924.); Opes Invs., Inc. v. Yun, 2014 WL 4160072, at *2-3 (Cal.
App. Div. Super. Ct. July 16, 2014) (reversing a grant of summary judgment to the
plaintiff, which offered the declaration of a man “with a beneficial interest in [an
unidentified] trust” who was “personally familiar with . . . plaintiff’s books and
records that relate to the subject premises” as evidence of valid purchase. The
declarant also stated that he, not plaintiff, was the “bona fide purchaser” of the
property. The court found the trial court erred in not sustaining defendants’
evidentiary objections based on declarant’s lack of foundation and contradictory
statements.); Dang v. Superior Court, No. 30-2013-684596 (Cal. App. Div. Super. Ct.
10
Servicing, LLC, for example, borrowers were compliant with their
permanent modification when their servicer foreclosed and the
purchaser brought an eviction action.50 The borrowers defended the
UD as part of larger litigation initiated by the borrowers against their
servicer.51 The court did not resolve the unlawful detainer, but found
that the servicer had breached the permanent modification contract
and that borrowers had a valid wrongful foreclosure claim to void the
foreclosure.52
III.
Litigation Issues Unique to Post-Foreclosure
Unlawful Detainers
A. Tender
As a general rule, parties seeking to undo a foreclosure sale must
“tender” (offer and be able to pay) the amount due on their loan.53
There are several exceptions to this general rule, including when the
sale itself would be void.54 Accordingly, when a former borrower
defends an unlawful detainer by asserting that the plaintiff failed to
comply with the duly perfected title/authority to foreclose aspect of
CCP 1161a(b), most courts do not require tender.55 In addition,
because they are not parties to the loan, courts have not imposed the
Jan. 31, 2014) (finding the homeowner likely to succeed on appeal because the
plaintiff filed the UD before recording the trustee’s deed).
50 Barroso v. Ocwen Loan Servicing, LLC, 208 Cal. App. 4th 1001, 1007 (2012).
51 Id.
52 Id. at 1017. But see Zavieh v. Superior Court, 2015 WL 1524546 (Cal. Ct. App. Apr.
2, 2015) (holding that while breach of loan modification agreement would render the
trustee sale void, such a claim is not a challenge to the statutory UD proceeding and
therefore the UD judgment was not res judicata to a subsequent wrongful foreclosure
case).
53 See Lona v. Citibank, N.A., 202 Cal. App. 4th 89 (2011) (stating the general tender
rule).
54 See, e.g., Dimock v. Emerald Props., 81 Cal. App. 4th 868, 877-78 (2000). A full
discussion of the tender rule and its exceptions in a foreclosure context is in HBOR
Collaborative, supra note 41, part III.C.
55 See, e.g., Wells Fargo Bank, N.A. v. Detelder-Collins, 2012 WL 4482587 (Cal. App.
Super. Ct. Mar. 28, 2012) (excusing tender when the sale was found void due to an
invalid trustee substitution); Seastone v. Perez, 2012 WL 6858725 (Cal. Super. Ct.
Dec. 13, 2012) (finding tender excused because defendant (former borrower) brought
a statutory defense to plaintiff’s perfection of title under CC 2924); cf. MCA, Inc. v.
Universal Diversified Enters., 27 Cal. App. 3d 170 (1972) (requiring tender when the
defendant combined statutory defenses with claims for affirmative relief to invalidate
the sale).
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tender requirement on tenants who challenge the plaintiff’s compliance
with foreclosure notice and recording requirements of CC 2924.56
B. The Res Judicata Problem for Former Borrowers
If a foreclosing bank proved “duly perfected” title in an unlawful
detainer action, a subsequent affirmative wrongful foreclosure claim
brought by the former borrower against the bank is often barred by res
judicata, if the basis for the borrower’s affirmative claim is also
validity of title. This is true even if the borrower did not allege
improper title as part of her general denial of the UD plaintiff’s case,
but could have.57
This is a tricky problem to address because many former borrowers
litigate UD actions without legal representation not anticipating that,
by not addressing title, they are destroying any chance they have of
attacking the foreclosure in the future.58 Even if former borrowers are
56 JP Morgan Chase Bank v. Callandra, No. 1371026 (Cal. Super. Ct. Santa Barbara
Cnty. Oct. 21, 2010) (allowing tenant to challenge the foreclosure without tender
because the foreclosing entity had failed to post a notice of trustee sale).
57 See, e.g., Hopkins v. Wells Fargo Bank, N.A., 2013 WL 2253837, at *4-5 (E.D. Cal.
May 22, 2013) (barring former borrower’s wrongful foreclosure claim because
defendant bank had already established duly perfected title in a previous UD action
and the borrower could have litigated their § 2923.5 issue there); Castle v. Mortg.
Elect. Registration Sys., Inc., 2011 WL 3626560, at *4-9 (C.D. Cal. Aug. 16, 2011)
(dismissing plaintiff borrower’s wrongful foreclosure claims because title was
“litigated” in the previous UD action, even though there was a default judgment in
that action); Lai v. Quality Loan Serv. Corp., 2010 WL 3419179, at *4 (C.D. Cal. Aug.
26, 2010) (finding borrower’s requests for declaratory relief and to set aside the
foreclosure sale issues already litigated in a previous UD action); Malkoskie v.
Option One Mortg. Corp., 188 Cal. App. 4th 968, 973 (2010) (applying the same
reasoning described in Hopkins).
58 Challenging a bank’s “authority to foreclose” can be extremely difficult in an
affirmative, wrongful foreclosure or quiet title case because, while a foreclosing entity
must actually be one the of the parties listed in CC 2924(a)(6) to possess that
authority, nothing in the statute actually requires them to prove they are who they
say they are. Conversely, in a UD, the burden is on the plaintiff to prove they
possessed the authority to foreclose and complied with all aspects of CC 2924. The
UD court then, should require the UD plaintiff to prove they are the beneficiary,
trustee, or designated agent capable of foreclosing. See, e.g., US Bank, N.A. v.
Cantartzoglou, 2013 WL 443771, at *6-11 (Cal. App. Div. Super. Ct. Feb. 1, 2013) (“In
her verified answer, [former homeowner] denied the allegation that [bank] had
purchased and perfected title in the property at the trustee's sale. That denial put
[bank’s] ownership of the property at issue, thereby obligating [bank] to prove its
ownership at trial as an element of its case.”).
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represented, advocates defending UD actions are unlikely to also
represent former borrowers in affirmative wrongful foreclosure cases.
This is an unsettled area of law, but if a former borrower or their
counsel is fortunate enough to realize the impending res judicata
problem as they defend an eviction (or even before the UD is filed),
they should file an affirmative suit against their servicer (which is, or
will be, the UD plaintiff) as soon as possible. This allows for a couple of
different options moving forward: 1) move to stay the UD until the
wrongful foreclosure suit is resolved; or 2) move to consolidate the UD
with the wrongful foreclosure suit.59 Either option allows for the
litigation of title outside the context of an unlawful detainer, which
some UD courts insist is meant to decide possession only, even in a
post-foreclosure context.60
Very few cases have considered whether HBOR claims brought
post-sale constitute “title” issues that would be barred by res judicata
after an unsuccessful unlawful detainer defense. Advocates facing this
possibility should argue that HBOR claims fall outside the scope of
“title” and may therefore be litigated after a UD.61
C. Rights of Unnamed Occupants
A new landlord who wishes to evict existing, holdover tenants must
serve a summons and complaint to begin the UD process.62 For the
eviction judgment to bind unnamed tenants, the landlord must also
59 See Martin-Bragg v. Moore, 219 Cal. App. 4th 367, 385 (2013) (finding that the UD
defendant and former borrower was prejudiced by the trial court’s refusal to
consolidate the UD with the former borrower’s affirmative wrongful foreclosure suit).
60 Advocates should also argue that in the post-foreclosure UD context, as opposed to
the standard UD, title should be at issue because it is part of the UD plaintiff’s prima
facie case. Even if a UD judge agrees that title is appropriately litigated in a postforeclosure UD, however, advocates should be warned that the UD timeline is much
shorter than in normal litigation. See generally CEB, supra note 14 at § 11.5. It may
be difficult to conduct discovery related to a complicated title analysis in a shortened
timeframe.
61 See Bolton v. Carrington Mortg. Servs., LLC, No. 34-2013-00144451- CU-OR-GDS
(Cal. Super. Ct. Sacramento Cnty. July 24, 2014) (HBOR violations outside scope of
unlawful detainer actions and not barred by res judicata).
62 The standard procedure, at least for corporate purchasers of foreclosed homes, is to
name only the former borrower on a UD summons and complaint, but to also list
“Does 1-10” and “all occupants,” thereby covering any tenants that may or may not
reside on the property.
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include a blank prejudgment right to possession form.63 Before HBOR,
any unnamed tenants residing on a foreclosed property needed to
complete this form and file it with the court within 10 days of being
served notice.64 If they did not, these tenants lost all rights to assert
possession by defending the UD,65 or to object to the enforcement of a
judgment for possession.66 Because of HBOR, however, unnamed
tenants in post-foreclosure UD actions can now file a claim of right to
possession or object to a judgment at any time before a lockout.67
D. Masking Rule
Finding rental housing with an eviction on your rental record can
be difficult and often puts another strain on already stressed tenants
and former borrowers. Usually, court documents related to unlawful
detainer cases are “masked,” or not available to the public, for only 60
days after the complaint is filed.68 After this 60-day “curtain,” the case
file becomes public unless the defendant prevailed in the UD.69 Since
2010, tenants and borrowers defending post-foreclosure evictions have
been afforded more protection: UD documents are masked for 60 days
following the filing of the complaint, and then permanently masked
unless the plaintiff prevails within those 60 days, against all
defendants, after a trial.70
E. Security Deposits
A tenant’s previous landlord, and that landlord’s successor-ininterest, are jointly and severally liable for a tenant’s security
63 See CAL. CIV. PROC. CODE § 415.46 (2012). Including this form complied with preHBOR post-foreclosure eviction law but did not give tenants a fair opportunity to
assert the right to possession they were entitled to under PTFA or local just cause
statutes.
64 See CAL. CIV. PROC. CODE § 1174.25(a) (2007).
65 Id.
66 See § 1174.3 (2007). For more on this subject, see CEB, supra note 14, at § 24.2.
67 See CAL. CIV. PROC. CODE § 415.46(e)(2) (2012); Manis v. Superior Court, No. 1-13AP-001491 (Cal. App. Div. Super. Ct. Apr. 26, 2013) (claim of right to possession
must be granted when the claimant has a valid claim to possession); see also CEB,
supra note 14, at § 24.6.
68 See CAL. CIV. PROC. CODE § 1161.2(a)(5) (2013).
69 § 1161.2(a)(6)
70 Id. Documents are still available to parties listed as exceptions in § 1161.2(a)(1)(4).
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deposit.71 If the original landlord did not return the tenant’s security
deposit before the foreclosure sale, the new landlord must return the
deposit, and the tenant should name both landlords in any small
claims suit to recover the deposit. One case also held that a tenant in
possession post-foreclosure has standing to bring a rent-skimming
claim to recover the security deposit as damages.72
IV.
Evictions of Tenants for Nonpayment of Rent and
Breach of Lease
Because California law now clarifies that the landlord-tenant
relationship continues after foreclosure,73 a tenant may also face
evictions due to non-payment of rent or breach of a lease term.74
Because these evictions are based on CCP 1161, the 90-day notice
protection in CCP 1161b and the cover sheet requirement of CCP
1161c do not apply.
Finally, successors-in-interest (new landlords) must provide notice
to existing tenants of the change in ownership within 15 days of
assuming ownership.75 A new landlord must comply with the notice
requirement before the landlord can evict for non-payment of rent.76
Landlords may, however, request back-rent for any time a tenant was
not paying rent, and bring an action in small claims court to do so.77
CAL. CIV. CODE § 1950.5(j).
Ferguson v. Tr. Holding Serv. Co., 2014 WL 810852, at *4-7 (Cal. Ct. App. Mar. 3,
2014). Rent skimming refers to a landlord’s application of rental payments, during
the landlord’s first year of property ownership, on things other than the landlord’s
mortgage, without first applying the rent to the mortgage. See CAL. CIV. CODE §
890(a)(1).
73 See CAL. CIV. PROC. CODE § 1161b (2013) (“[A]ll rights and obligations under the
lease shall survive foreclosure.”). Several courts have also found that the landlordtenant relationship continued post-foreclosure under the PTFA. See Mik v. Fed.
Home Loan Mortg. Corp., 743 F.3d 149 (6th Cir. 2014); Nativi v. Deutsche Bank Nat’l
Tr. Co., 223 Cal. App. 4th 261, 277-84 (2014); Erlach v. Sierra Asset Servicing, LLC,
226 Cal. App. 4th 1281, 1295 (2014) (finding the purchaser at foreclosure sale
becomes the new landlord of the existing tenant and is obligated to remedy
habitability issues).
74 But see Solid Rock Homes, LP v. Woods, No. 37-2012-00200205-CL-UD-CTL (Cal.
App. Div. Super. Ct. Nov. 20, 2013) (finding tenants need not pay rent to benefit from
the post-foreclosure notice requirements in former CCP 1161b or the PTFA).
75 CAL. CIV. CODE § 1962(c) (2013).
76 Id.
77 “Nothing in this subdivision shall relieve the tenant of any liability for unpaid
rent.” Id.
71
72
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Conclusion
Defending tenants and former borrowers in post-foreclosure
unlawful detainer actions requires advocates to become versed in
California foreclosure law. These types of cases also open up UD
defenses uncommon in standard landlord-tenant cases: improper
foreclosure notice and recording procedures and imperfect title.
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